This information forms part of the publication PAYG withholding for small business (NAT 8075). It is also available in PDF and paper format.

If you have employees or pay employees of another entity, you are required to withhold an amount from payments you make to them. If you conduct your business through a company, you are also required to withhold from payments to your company directors for their services. You may have to withhold an amount from payments to other workers such as contractors.

 You also need to withhold an amount from payments to other businesses if they don’t quote their Australian business number (ABN) to you on an invoice or other document if required.

You send all withheld amounts to the Tax Office.

This is called ‘withholding’ and is done using the pay as you go (PAYG) withholding system.